Weekly market news: 3 February 2025
This week, the spotlight’s on Big Tech, with Alphabet, Amazon, and Palantir set to release their earnings. After last week’s AI-heavy earnings from Microsoft, Meta, and others, expectations are running high, but so are the risks. It’s a crucial moment for the ‘Magnificent Seven’ tech giants – Alphabet, Amazon, Microsoft, Meta, Apple, Nvidia, and Palantir – who’ve been riding the AI hype to sky-high valuations.
The broader tech landscape is in a bit of a holding pattern. While AI is still the major draw, investors are starting to demand more substance than just visionary promises. These earnings won’t just be about flashy AI demos; investors will be looking for signs of actual growth in cloud businesses, enterprise AI adoption, and whether consumer demand can hold up amidst ongoing macroeconomic pressures. The stage is set for a battle between excitement over AI potential and the reality check of rising interest rates and inflation.
Meanwhile, out of the blue, China’s DeepSeek – a tiny AI startup that’s only been around for a year – has thrown down the gauntlet with a low-cost ‘reasoning’ AI model that outperforms US models on key benchmarks. This has put the global tech market on edge, especially as DeepSeek’s success challenges assumptions about AI’s economics and scalability. If these developments gain traction, it could seriously shake up the balance of power between the US and China in the AI race.
The week ahead will be key in figuring out if Big Tech can weather the storm and deliver solid results – or if it will be another round of investors looking for answers to a sector that’s running hot but under pressure.
Coming up this week
- Monday: Eurozone inflation (January), US manufacturing activity (January).
- Earnings: Palantir
- Tuesday: China manufacturing activity (January).
- Earnings: Alphabet, Estée Lauder, PayPal, PepsiCo, Pfizer, Spotify, AMD, Super Micro Computer, Merck
- Wednesday: US service sector activity (January).
- Earnings: Alibaba, MicroStrategy, Uber, Walt Disney, ARM, Ford, Novo Nordisk, Qualcomm
- Thursday: Bank of England interest rate decision, Eurozone retail sales (December).
- Earnings: Amazon, Pinterest, Philip Morris, Eli Lilly
- Friday: US jobs report (January), US consumer confidence (February), Japan household spending (December)
What you might’ve missed last week
- Global: Chinese startup DeepSeek caused a stir with its new, cost-effective ‘reasoning’ AI model.
- US: The Federal Reserve left interest rates unchanged, signaling caution amid cooling inflation.
- Big Tech: Earnings results from major players like Microsoft and Meta mixed with some notable disappointments.
- Europe: The European Central Bank cut interest rates for the fifth time amid a stalling eurozone economy.
Why it matters
Big Tech’s earnings have become more than just a reflection of their own performance—they’re a barometer for the entire tech sector’s health. After last week’s mixed earnings from Microsoft, Meta, Apple, and Tesla, the real question is whether the ‘Magnificent Seven’ can prove their worth in the face of economic uncertainty. While some companies are touting AI as the future, investors are asking if they’re delivering the goods on cloud growth, enterprise AI adoption, and overall consumer demand.
The DeepSeek launch is also a critical moment. It’s showing that the AI revolution isn’t just for Silicon Valley’s big players anymore. If the Chinese startup can keep up this momentum, it could force the US giants to rethink their strategies—especially when the cost of developing cutting-edge AI could be dropping faster than expected.
In China, Alibaba’s quietly powerful AI claims could make this earnings season especially important. With its cloud business on the rise and new AI advancements under its belt, Alibaba could become a real competitor to US tech in ways it hasn’t before. And with its stock trading at a steep discount compared to its US counterparts, a strong report could spark significant momentum.
The stakes are high this week: if Big Tech delivers strong earnings, it’ll go a long way toward quelling investor nerves. But any missteps could cast a shadow over the AI narrative, leaving markets to question whether the next chapter in tech is really as clear-cut as they thought.
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